Iraq granted exemption; French and Japanese vessels pass one after another, Hormuz traffic reaches highest level since the war.

```

The blockade of the Strait of Hormuz has shown clear signs of easing. Iran announced that it will grant Iraq a transit exemption; a French container ship and a Japanese liquefied petroleum gas carrier have successfully crossed the strait in succession. As of Friday, the seven-day rolling average of vessel transits through the Strait of Hormuz reached its highest point since the outbreak of US-Iran hostilities at the end of February.

The latest major development comes from Iraq’s exemption announcement. In a video statement released by the military spokesman for Iran on the Islamic Republic News Agency (IRNA), he said, "Brotherly country Iraq" is exempt from any restrictions imposed by Iran on the Strait of Hormuz; the relevant restrictions apply only to "hostile countries." If the exemption is implemented, it could theoretically release up to 3 million barrels per day of Iraqi oil shipments.

Although transit volume is gradually recovering, doubts remain about whether these arrangements can last. It is still unclear whether the Iraqi exemption applies to all Iraqi oil shipments and whether it can be effectively implemented; Iraqi officials have also warned that the actual effect of the exemption depends on whether shipping companies are willing to risk entering the strait to pick up shipments.

Iraqi Exemption: Potential Release of 3 Million Barrels per Day

On April 5 (local time), an Iranian military spokesman said in a video statement released on IRNA that "brotherly country Iraq" is exempt from any restrictions imposed by Iran on the Strait of Hormuz; the relevant restrictions apply only to "hostile countries."

Iran’s control over the Strait of Hormuz is one of its most important bargaining chips in the current conflict. This exemption statement is so far Iran’s most significant move to relax transit restrictions.

Theoretically, this exemption has significant impact— Iraq is one of the world's major oil producers, with export volumes involving up to 3 million barrels per day.

However, an Iraqi official took a cautious stance, pointing out that whether the exemption can truly take effect depends on whether international shipping companies are willing to dispatch ships into the strait. It is still unclear whether the exemption covers all Iraqi oil or only ships flying the Iraqi flag, and the enforcement mechanism remains to be clarified.

French and Japanese Ships First to Break Through, Transit Hits War-time High

Previously, the ships that successfully passed through the strait were mostly from countries friendly to Iran. The passage of French and Japanese vessels marks the first breakthrough of this pattern.

According to Bloomberg data, since last Friday morning, a total of 13 ships have transited, including 10 sailing out of the Persian Gulf and 3 coming in from the open sea. Among the outbound ships were 5 bulk carriers, 1 product tanker, and 4 liquefied petroleum gas carriers.

CCTV quoted Japan’s Mitsui O.S.K. Lines saying that one of its affiliate's LPG vessels passed through the Strait of Hormuz before April 4 Japan time, marking the second known Japanese-affiliated ship to leave the Gulf since the blockade. The French container ship CMA CGM Kribi crossed the strait last Friday, becoming the first known Western European-associated vessel to complete a transit since the war broke out.

Turkey’s Minister of Transport and Infrastructure Abdulqadir Uraloğlu revealed that since the conflict began, 15 Turkish-owned ships had been stranded near the strait. The first one received Iranian permission to transit in mid-March, and the second completed the passage recently.

These breakthroughs occurred after French President Macron called for a ceasefire and emphasized the need to reopen the strait. However, it is still unclear whether these passages were the result of government diplomatic efforts or arrangements achieved through ad hoc commercial negotiations by companies and intermediaries.

Five-tier Fee System, Diverging North and South Routes

Behind the gradual rebound in transit volume, an Iran-led transit mechanism is taking shape.

According to The Paper, quoting sources, the Islamic Revolutionary Guard Corps has started charging “transit fees” to ships passing through the strait and has established a five-tiered fee system based on relations: the friendlier the nation is with Iran, the better the terms offered; countries seen as hostile face threats or even attack risks. Generally, negotiations for oil tanker transit fees start at about $1 per barrel, paid in RMB or stablecoin. Pakistan has secured safe passage with a bilateral agreement.

Sailing routes are also diverging. Most early transit ships used the northern route, close to Iran—passing between Iran’s Larak and Qeshm islands. Recently, another route emerged: ships travel along the Omani coast, taking the southern waterway of the Strait of Hormuz eastward. The Sohar LNG vessel, 50% owned by Mitsui O.S.K. Lines, and two other VLCCs all took this southern route.

On the operational side, Iran is drafting an agreement with Oman to jointly monitor and coordinate shipping in the Strait of Hormuz, but Oman has yet to clarify its position.

Uncertainty Remains, Viability of Arrangements to be Tested

Despite the continuing rise in transit numbers, the market remains cautious about whether the current progress can transition into stable arrangements.

Ship tracking data shows the Sohar is currently near Muscat and, after changing its destination to Oman’s Qalhat LNG export terminal, appears not to be carrying cargo; it previously lingered in the Persian Gulf for over a month.

The French and Japanese ship transits contrast with the earlier pattern dominated by vessels from Iran-friendly nations. Whether this means a substantive diplomatic breakthrough remains inconclusive. Bloomberg data show that even though the current transit volume is at a new high since the war began, it remains a fraction of prewar levels—under normal circumstances, about one-fifth of the world’s daily oil and LNG pass through the strait.

With the war ongoing and differing statements from all sides, whether the Iraqi exemption will be implemented, whether French and Japanese transits will become routine, and whether Iran’s fee system will gain broader acceptance remain key variables closely watched by the energy market.

Risk Warning and DisclaimerThe market is risky, investment needs to be cautious. This article does not constitute personal investment advice and does not consider individual users’ particular investment objectives, financial situations, or needs. Users should consider whether any opinions, views, or conclusions in this article are appropriate for their circumstances. Investment decisions based on this article are at one’s own risk. ```